Macro Economic Trends and Risks
Report from India: Part II

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By huddaman
December 11, 2007

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This post is a part II of the following post.

I wish to share my final thoughts upon completion of my 15 day trip to India. I returned to India after 7.5 years, and the experience was amazing.

First of all, I believe USA possesses an environment that will allow it to continue to be the top dog in the world economy. Why? For the same reasons it has been the top dog until today. Look at the 20th century, and you will see the greatest discoveries have originated from the US. Viz. airplanes, motor vehicles, light bulb, computers, PC, Google, Microsoft, Oracle, Intel, life saving medicines and biotech drugs, surgical equipment, MRI machines, alternative fuels etc. I don't see any reason why the 21st century would be any different. USA continues to spend top dollar on R&D. In contrast, can you name anything spectacular that developing nations have contributed except low cost manufacturing and services? Certainly all the discoveries I mentioned above were contributed by most of the world population, but while residing in the USA, with USA as the primary beneficiary.

India still has lots and lots of progress ahead of it, since its just started dramatic development for only 5-7 years. There is an extreme mix of people here, some very educated, but most extremely illiterate and poor. For example, I spoke to a taxi driver who was about my age. He mentioned he has 2 kids. I suggested he better feed the two and educate them well, instead of going for more. He instead expressed, he needs to have at least 4 or 5 kids. I asked why? And he said, his parents belong to old school of thought. Well, think about it. A taxi driver in Bombay lives below the poverty line, and can barely afford to put food on the table. And he dreams of having 5 kids thus doubling the number of poor below poverty line between him and his wife. A servant at my home is around 20 and was carrying her 3rd kid. With 2 kids already at home, obviously not attending any kind of schooling. My parents insisted she quit work and take it easy, but she insists she will continue to work. If we don't hire her, she will do it anyway somewhere else. Such is the state of poor in India. Did I mention her husband lives with the mother in the village and occasionally visits Bombay; you guessed why? To get her pregnant!

My general observation and comparison of USA vs. India was as follows.

The corruption in India is pretty obvious. The government sanctions funds to build the obvious infrastructure needs like basic roads, but the contractors bribe the government officials, and deliver poor results and get away with it. Any visit or meeting with a government employee including a road side constable (cop) requires that you bribe to get away of the meeting with what you desire. Be it permission to illegally extend your shop (store), or get away from a moving traffic violation, or illegally park on a no-parking area, or get a license for your business to perform a legal operation. Even for legal business needs, you need to bribe government officials. How is this different from USA? Well, the government in the USA is mostly non-corrupt. They neither accept bribes from contractors nor accept poor results. They never accept bribes or tolerate bribes and let people get away with petty violations. They never require you to bribe government employees to let you carry out your day to day business. They let general people function in the economy without forcing them to learn the art of bribing. In fact they even prosecute such actions. Have you ever heard any employee at your Social security administration requiring you to bribe him in order for you to collect your own social security checks? So the system here in USA is much better than India.

However, the political system and democracy here encourages legal form of bribery, e.g. campaign financing, political gifts or lobbying. When the CEO of large oil company or pharmaceutical goes out of his way and throws campaign financing parties and encourages his friends and contacts to contribute the maximum allowable by law to his favorite candidate, that's a legal form of bribing. Obviously, if a political party or candidate on the receiving end of this money will be obliged to push the agenda. Having said that, it's still much better than any illegal-under-the-table bribery that exists at all levels in a developing nation. If the above is not the case, how can you explain why Motor vehicles in USA still run on Gasoline (Petrol) whereas a 3rd world underdeveloped nation like India's metro Mumbai has all Taxis, and public transport vehicles mostly running on compressed natural gas? I believe the technology to run on alternative fuel like fuel cells etc not only exists in the USA, but probably was discovered in the USA, and if anything, USA should be the first one to start using it on a mass scale. How else can you explain big pharmaceuticals in USA getting away by charging big bucks for medicines to Americans, whereas the same sell for lot less in Canada and Europe?

People who are doing well in India generally have a better quality of life or standard of living then people of similar financial stature in USA. I am pretty sure my business manager who earns probably 3-5 times more than me does not have a full time cook, maid and chauffeur. I bet you, if he lived in India, he would have all of that and more. In fact, if I moved back to India, I would never have to touch the dishes, or scrub my bathtub, or iron my dress pants or dress shirts. My wife could completely avoid cooking for as long as she wishes because we could easily afford a cook and maid in our home. We might have a washing machine at home, but we would never have to wash and fold our own clothes. All this by just moving to India, without changing our profession. Heck, if we get too lazy, we could even get a chauffeur. Why is the above even possible? Because while India has lots of highly paid professionals, it has no shortage of lower middle class poor who can serve the middle class. Hopefully one day the lower middle class will graduate to upper middle class, with little help from kind employers and government. If I hire any of these to serve me, I would like to see their children do better and access to education and hope to control their own destiny. (In other words rise above the line of poverty.) Obviously, I cannot even dream of getting a full time maid, cook etc in USA. Obviously, if the government here in USA wished that their hardworking professionals and businessmen afford these luxuries, they could easily make that happen. In the process, also boost US economy. How? By opening legal means of immigration.

We all know and all politicians generally submit that we need all the undocumented workers in USA that already live here. Why not instead offer them a fast and legal channel of entering the country, and thus make everyone's life safe, easy and stress free. I believe it's a crime against humanity to encourage a poor neighbor or distant neighbor to enter the country on false pretext and then encourage him to work here without legal documents. It's easy to blame the undocumented alien, but unless we get into their shoes and experience abject poverty, we cannot understand why they are doing what they are doing. As long as Americans hire illegal aliens, allow illegal aliens to study in their schools, get treated in hospitals, and use all social services, illegal aliens will enter the country. Just as the country opened up legal channels for professionals to enter the country legally, and work here, similar channels should be created for blue collar jobs.

My suggestion
A) Make it a felony to hire an undocumented alien. Make it impossible to for them to use any social services like schools, hospitals etc.

B) Make it possible for workers interested in getting blue collar jobs in USA to apply for immigrant visas and approve those fast and bring them into the country with honor. The same "undocumented alien" will now be a legal "documented alien". The above should also be made possible for 12 million or so undocumented aliens already present, but it should not guarantee approval of their petition. In other words, if they fail to meet the requirements (e.g. clear criminal and health records), they should eventually be forced to leave (see A)

C) To immediately remedy the issue of and need of the blue collar worker, open up the legal form of migration first, and set a date of around 12-20 months from that law after which you institute A. In other words, until B is fully implemented, you cannot implement A.

Just my 2 cents.